Lancashire were set 231 to win and docked one of their 40 overs because of a poor over rate in the Essex innings.
But Watkinson set them on course with 66 from just 58 balls, smashing three sixes and three fours in an opening stand of 101 in 18 overs with Mike Atherton.
It was his first half-century all season in the Sunday League, the gamble of opening as a pinch hitter finally paying off at the ninth attempt, and was greeted with warm applause from the Old Trafford crowd.
Lancashire's other hero was Peter Martin, who celebrated his selection in the England squad to go to Sharjah by breaking Wasim Akram's county record of 29 wickets in a Sunday season even if it was a Tuesday. Martin claimed 5-41, his second five wicket haul of the season, to move to 31 and stay on course for a £5,000 pay out from sponsors Axa Life as the competition's leading bowler - he is now three ahead of Hampshire off-spinner Peter Such.
Of his selection, Martin said: ``It's nice to get picked for Sharjah. I was very disappointed at getting dropped earlier in the summer for the one-dayers because I've always done really well in those whereas I suppose my Test form has been a bit sketchy. I would have been surprised to be in the squad for West Indies. Mind you I would have been surprised if you'd have told me they picked Angus Fraser and Ashley Cowan.''
Essex captain Paul Prichard hit a superb 103 off 100 balls, but then blotted his copybook by dropping John Crawley on nought. And the Essex born England tourist punished Prichard with 53 from 51 balls, sharing a third wicket stand of 88 with Graham Lloyd which took Lancashire to the brink of victory. They still have no chance of overhauling leaders Kent for the title, but victory in their last game at Surrey on Sunday could secure second place.
Lancs made an excellent start to today's championship game at Surrey, Mike Atherton not out on 67 and Nathan Wood 42 in a total of 115 without loss.
¥Jack Simmons is red-hot favourite to be elected Lancashire Chairman in succession to Bob Bennett at an Old Trafford committee meeting tonight.
John Brewer was his only challenger, but Simmons is a more obvious figurehead to win over a disgruntled membership - which makes him the committee's more likely choice.